21 March 2024 – Due to a decline in the technology sector, venture capital investors are placing increasing pressure on late-stage businesses to provide partial exits. According to many industry officials, substantial $50 million investment rounds in the last year have featured a sizeable secondary component that offers liquidity for current investors.
Speaking with ET, industry insiders with knowledge of mid-scale startup operations said that current investors in these businesses are pressing for exits, even at lower values. According to the person mentioned above, “This is only one example and more such deals are currently structured that will play out in the coming months,” a Bengaluru-based startup that provides supply-chain solutions for retail businesses is expecting to see a significant drop in valuation and be the subject of ongoing discussions for secondary deals. The startup was last valued at approximately $300 million.
Early investors’ increasing appetite for exits coincides with a sharp decline in venture investments, which fell sharply from a peak of $38.5 billion in 2021 to $9.6 billion in 2023, as reported by Bain & Company. Domestic startups have amassed $25.7 billion as of 2022.
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One of the first backers of omnichannel eyeglasses shop Lenskart, TCM Sundaram, cofounder of early-stage venture financing company Chiratae Ventures, stated, “Investors are in a baton exchange game…we invest early, and then the growth-stage investors come in.”
